San Francisco Unified School DistrictLocal Government

FINDING #2023-007: ALLOWABLE COSTS/COST PRINCIPLES – TIME AND EFFORT REPORTING (50000) Assistance Listing Number and Title: 84.010 ‐ ESEA (ESSA): Schoolwide Programs (SWP) Federal Grantor Name: U.S. Department of Education; Passed through California Department of Education Criteria: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, requires an accounting for personnel time on multi‐funded positions by the time spent on each program and to semi‐annually certify positions charged 100% to federal programs. Standards for Documentation of Personnel Expenses Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: • Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; • Be incorporated into the official records of the non‐Federal entity • Reasonably reflect the total activity for which the employee is compensated by the non‐Federal entity, not exceeding 100% of compensated activities • Encompass both federally assisted and all other activities compensated by the non‐Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non‐Federal entity’s written policy; • Comply with the established accounting policies and practices of the non‐Federal entity. • Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non‐Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. • Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards but may be used for interim accounting purposes. Condition: Auditor selected employees with salaries coded to the federal programs noted above. The following deficiencies were noted: • ESEA (ESSA): Schoolwide Programs (SWP) (Resource 3150): 2/60 employees tested with salaries coded to the program during the fiscal year did not have time certifications on file for the 2022-23 year. Cause: The District has not been following its policy for proper time accounting. Effect: The District is not in compliance. Questioned Costs: Although the District was not in compliance, we were able to review alternative documentation to determine that employees charged to the program were allowable. Repeat Finding: This is a repeat finding, see prior year finding #2022-008. Recommendation: We recommend that the District prepares time certification semi‐annually for single funded employees and monthly for multi-funded employees. Views of Responsible Officials: See Corrective Action Plan on following page.

2022-008 Education Stabilization Fund (ALN 84.425), Federal Department of Education Child Care and Development Block Grant (ALN 93.575, 92.596), Federal Department of Health and Human Services Passed through the California Department of Equation Noncompliance and material weakness in internal control over Federal compliance Code 40000, 50000 Compliance Requirements Affected: Activities (A) and Costs (B) Criteria The Uniform Guidance 2 CFR section 200.430 specifies the standards for documenting salaries and wages charged to federal programs. 2 CFR section 200.200 stipulates the standards for documenting that direct charges to federal awards are for allowable costs. Condition The District did not provide supporting documentation for all the samples requested to support the audit. Cause We believe the cause is the turnover of District personnel, leaving no single responsible person with sufficient accountability to ensure full compliance. Effect The District was unable to support that it complied with the terms and conditions of Federal grant agreements. Questioned Costs Known and likely questioned costs by program are as follows: ALN Known Likely 84.425 $97,810 $48,365,738 93.575, 92.596 $39,372 $6,711,381 Context Audit samples of which no documentation was provided are considered deviations. The following table shows the number of deviations with the audit sample per program: ALN Sample Size Number of Deviations 84.425 68 31 93.575, 92.596 47 28 Recommendation We recommend that the District assigns a single person responsible for ensuring compliance and providing supporting documentation to the auditors. Views of Responsible Official The District has not prepared a response as of the date of this report. Identification as a Repeat Finding This finding was not reported in the previous year's audit.

2022-009 Child Nutrition Cluster (ALN 10.553, 10.555), Federal Department of Agriculture Passed through the California Department of Equation Noncompliance and material weakness in internal control over Federal compliance Code 40000, 50000 Compliance Requirements Affected: Reporting Criteria The District must submit monthly claims for reimbursement for meals and snacks served to eligible students. Each month?s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. Records are required to be retained for a period of three years after submission of the final Claim for Reimbursement for the fiscal year. Condition The District did not provide supporting documentation for all the samples requested to support the audit. Cause We believe the cause is the turnover of District personnel, leaving no single responsible person with sufficient accountability to ensure full compliance. Effect The District was unable to support that it complied with the terms and conditions of Federal grant agreements. Questioned Costs Known questioned costs are $6,913,076 and likely questioned cost are $17,773,848. Context The condition applies to three transactions from our sample of four. Recommendation We recommend that the District assigns a single person responsible for ensuring compliance and providing supporting documentation to the auditors. Views of Responsible Official The District has not prepared a response as of the date of this report. Identification as a Repeat Finding This finding was not reported in the previous year's audit.

2022-010 Child Care and Development Block Grant (ALN 93.575, 92.596), Federal Department of Health and Human Services Passed through the California Department of Equation Noncompliance and material weakness in internal control over Federal compliance Code 40000, 50000 Compliance Requirement Affected: Special Tests and Provisions Criteria Program participation requires that Lead Agencies shall recover child care payments that are the result of fraud. These payments shall be recovered from the party responsible for committing the fraud (45 CFR section 98.60). Auditors are required to review the Lead Agency?s procedures for identifying and recovering payments resulting from fraud, including the Lead Agency?s definition of fraudulent childcare payments. Condition Although the District informed us that it has not identified any payments that are the result of fraud, we also were not provided the District?s procedures for identifying and recovering payments resulting from fraud, or the District?s definition of fraudulent childcare payments. Cause Personnel may have misunderstood the requirement to formalize applicable procedures and formally define ?fraudulent childcare payments.? Effect The District was unable to support that it complied with the terms and conditions of Federal grant agreements. Questioned Costs No questioned costs are associated with this finding. Context Although no fraudulent payments are known to have occurred, the requirement is that all administering agencies develop procedures and definitions for identifying them. Recommendation We recommend that personnel responsible for program administration consult with legal counsel to formally develop procedures for identifying and recovering payments resulting from fraud, including the Lead Agency?s definition of fraudulent childcare payments. Views of Responsible Official The District has not prepared a response as of the date of this report. Identification as a Repeat Finding This finding was not reported in the previous year's audit.